Freddie Mac

1. A stockholder-owned corporation chartered by Congress in 1970 to help supply funds to mortgage lenders such as commercial banks, mortgage bankers, savings institutions, and credit unions that in turn make funds available to homeowners and multifamily investors. Freddie Mac purchases mortgages from lenders and then packages the mortgages into guaranteed securities that are sold to investors. The firm's common stock trades as FRE on the New York Stock Exchange. Formerly called Federal Home Loan Mortgage Corporation.

2. A security that is issued by this corporation and is secured by pools of conventional home mortgages. Holders of Freddie Macs receive a share of the interest and principal payments made by the homeowners.

Freddie Mac.

Freddie Mac is a shareholder-owned corporation that was chartered in 1970 to increase the supply of mortgage money that lenders are able to make available to homebuyers.

To do its job, Freddie Mac buys mortgages from banks and other lenders, packages them as securities, and sells the securities to investors. The money it raises by selling these bonds pays for purchasing the mortgages.

Lenders use the money they realize from selling mortgages to Freddie Mac to make additional loans. Lenders must be approved in order to participate in the program. Loans must meet Freddie Mac qualifications to be eligible for purchase.

To facilitate the lending process, Freddie Mac provides lenders with an automated underwriting tool to help them evaluate mortgage applications.

For example, depository institutions, mortgage bankers, Fannie Mae and Freddie Mac, and the private mortgage insurers have worked together to introduce a host of new programs targeted at lower-income households; prominent among these are Fannie Mae's Community Home Buyers program and Freddie Mac's Affordable Gold program, both of which allow more flexible underwriting standards for the loans these institutions purchase.

Freddie Mac has sold certain classes of real estate mortgage investment conduits (REMICs) that entitle the holder to exercise a one-time option to put the securities to Freddie Mac, at par, on a specific date.

He added, "Owners should now require that when selecting Lender Representatives to underwrite permanent credit enhancement with either Fannie Mae or Freddie Mac, that financial advisors and brokers acting on their behalf make a broad solicitation of such Lender Representatives prior to their selection to determine which Lender Representative is willing to provide the most services and the best available program for the client's needs.

For example, under the affordable housing programs sponsored by Fannie Mae and Freddie Mac, the proportion of the downpayment and closing costs that must come from the applicant's own savings has been reduced, and lenders may consider rent and utility payment records in lieu of other credit history information.

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